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Who's To Blame For The Tube's Black Hole?
London Underground's biggest maintenance firm has hit the buffers. Is it also the end of the line for public-private deals?
Trouble for the tube maintenance firm Metronet has been on its way for almost as long as a delayed District Line train. It has now finally arrived when the contractor responsible for two-thirds of the London Underground network crashes into administration. The bust is clearly bad news for the capital's beleaguered commuters.
But, as the erstwhile poster-child of the Government's controversial Public-Private-Partnership scheme, Metronet is also shaping up to be the Prime Minister's first big embarrassment.
Four years ago, Gordon Brown forced through the part-privatisation of the Tube: partly to take the cost off the state, partly because he thought the network would run more efficiently, and partly to avoid giving too much power to London’s maverick mayor, Ken Livingstone. At least two of those three objectives have come badly asunder.
What went wrong? The answer's obvious: Metronet was formed from an unholy alliance of arch-privateers – Atkins, Balfour Beatty, Bombardier, EDF Energy and Thames Water – all expert at extracting money from government without delivering the goods. When costs overran by £2bn, they bailed out like rats.
These PPP chancers seem to want it both ways, to keep the contracts which coin it and to dump those that are less satisfactory. It's like Railtrack all over again and the chances are that, like Railtrack, the bill will eventually be paid by Taxpayer Anonymous.
Yet the whole point of PPPs, as with the Private Finance Initiative scheme generally, is that the financial risk is transferred to the private sector. If the model is as badly flawed as the Metronet shambles suggests, we're in serious trouble, since PFI penetrates almost every nook and cranny of life.
In total, 750 deals have been signed with a combined value of £55bn. Of the 68 hospitals completed in the first eight years of the Blair Government, 64 were PFI projects.
Yet it would be foolhardy to write off the whole model on the basis of one fiasco. The majority of PFI projects have delivered well and without them, many important projects would never see the light of day – including the biggest upgrade of the Tube since the Second World War.
If you get the contracts and management right, this system can work – as shown by London Underground's second PPP contractor, Tube Lines, which has so far incurred no substantial overruns.
In the case of Metronet, the City seems to have run rings round the civil servants. That should be a wake-up call for Whitehall.
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